Rents increasing across Australia

Rents increasing across Australia

Wednesday, 22 May 2013

Brendan Wong

Australia’s capital cities are experiencing a healthy growth in rents, particularly two cities, according to figures by RP Data.

Most of the rental growth has been in Perth and Darwin, where rents have increased by more than 10 per cent over the past year.

In Sydney and Brisbane rents have increased at about three to four per cent, while Adelaide and Melbourne’s housing markets have experienced one to two per cent growth.

RP Data senior researcher Cameron Kusher told The Adviser that rents were generally trending higher. The exceptions were Hobart and Canberra where they had fallen by 1.5 per cent and 0.9 per cent respectively.  

“[Rents] have typically grown at a faster pace than values over the past year, so we are tending to find that rental yields are improving,” he said.

“You’ve got strong yields in Darwin, up around six per cent, so too in Hobart and Canberra. There’s been some big improvements in yields in Perth, and Brisbane units are now yielding more than 5.5 per cent. From an investor perspective, some of those product types are becoming more attractive.”

Source: http://www.theadviser.com.au/breaking-news/8713-rents-increasing-across-australia  

Property Reports - Let Equitimax Help

When you are buying a property knowledge of the property market can save you thousands of dollars and could prevent you from making a bad investment.The key to knowledge is research

. . . . and Equitimax can help.

Equitimax can provide you with Property Reports from RPData, number one provider of property information, analytics and risk management services in Australia and New Zealand. We can then provide you with a number of reports to choose from:

What you need to do?

Give us a ring or email, let us know the property address and we can send you the report you want

Need a report - click here

RP Data - What impact will the RBA cust have on housing?

What impact will this month’s interest rate cut have on the housing market? At its December Board Meeting the Reserve Bank (RBA) decided to cut official interest rates by 25 basis points for the second month in succession. This week we take a look at the likely impact on the housing market. The Reserve Bank decided to cut official interest rates this week by 25 basis points taking the cash rate to 4.25%. This was the second successive month in which interest rates had been reduced. This is the first time since February and March 2010 that we have seen successive interest rate changes, and the first time since January and February 2009 there has been successive rate cuts. As at the end of November, the average standard variable mortgage rate was 7.55% and the average 3 year fixed rate was 6.4%. It remains to be seen whether the whole 25 basis point cut will be passed on. If it is, standard variable mortgage rates will revert to decade average levels. If 3 year fixed rates remain unchanged they will be 66 basis points below the decade average. From a housing market perspective, the big question will be: Will the successive rate cuts help to stimulate activity in the housing market? Undoubtedly interest rate cuts improve housing affordability. In stating this, capital city property values have fallen by -4.0% over the 12 months to October 2011 and rental rates have risen by 4.6% which also improves affordability. As the second graph shows, in the past changes to standard variable mortgage rates have generally encouraged greater property value growth. On the other hand, interest rate increases have tended to result in lower levels of value growth. The third graph highlights the relationship between standard variable mortgage rates and consumer sentiment. Much like property value growth, higher interest rates have often resulted in lower levels of consumer confidence and vice versa. Although history can be a guide to the future, we feel that conditions are somewhat different this time round. Property values are higher than they have ever been before and although interest rate cuts and value falls help boost affordability, it remains much more affordable to rent than it is to purchase. A raft of other economic indicators also suggest that market conditions may be somewhat different than they have been in the past. Retail trade has grown by just 3.4% over the 12 months to October 2011 which is well below the decade average growth of 5.4% annually. GDP Data released for the September 2011 quarter this week shows that the Australian economy expanded by 2.5% over the year compared to an average expansion of 3.0% annually over the past decade. The data also showed that households continue to save around 10% of their income which is at levels not seen since the since the mid 1980’s. The total value of housingfinance commitments have grown by just 4.1% over the 12 months to September and have fallen by -1.3% when refinances are removed. These figures are well below the respective decade averages of 9.4% and 8.9%. Considering that European Governments are currently experiencing a debt crisis, not to mention the ongoing weakness of the US economy, things are certainly not looking as strong as they have over much of the past 10 years. Given these conditions, it would seem unlikely that even if the Australian economy continues to perform comparatively strongly that credit for housing will be as freely available as it has been in the past. So the initial question was what impact will the interest rate cut have on the housing market? If the interest rates cut is passed on it will provide a much needed hand to those home owners under mortgage stress. It would also potentially encourage some more sales transaction activity however, this is unlikely to filter through until after January next year as December and January are typically the quietest months for housing market activity. An interest rate cut would also likely provide some support to consumer confidence levels. On the other hand, given the overall economic conditions we don’t believe that two 25 basis point cuts to interest rates will provide enough stimulus to result in any significant turnaround in property value growth. We suspect that consumers will remain cautious and continue to pay down their debt, housing finance is unlikely to be flowing as freely as it has in the past and consumers will be aware that the RBA won’t be afraid to lift interest rates rapidly again should the economic outlook improve. Given this, if the cut is passed on it would likely provide welcome relief to home owners and may encourage some increase in sales activity next year however, it is unlikely to provide a stimulant for property values to once again start increasing given the broader economic conditions.